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European shares edged up on Wednesday, with British supermarket Sainsbury’s leading the market higher after reporting sales figures in line with the consensus forecast.
Shares in Asian-focused bank Standard Chartered rose 3.2 per cent, with traders saying that one of the reasons for the rise was the possibility that British Finance Minister George Osborne might change a bank levy on the British banking industry at a speech later on Wednesday.
Sainsbury’s rose 3.7 per cent, the top gainer in the pan-European FTSEurofirst 300 index, after the company said sales at stores open over a year fell 2.1 per cent, excluding fuel, in the 12 weeks to June 6. The numbers were bang in line with expectations.
“There are some signs that future progress may be possible in non-food areas such as clothing, general merchandising and financial services,’’ Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said.
“Sainsbury is well positioned and performing solidly as the landscape alters towards online and convenience shopping, whilst from an investment perspective the projected dividend yield of 4 per cent, even after the cut, is an attraction to income seeking investors. The strong focus on cost savings across the business should also reap rewards if achieved.’’
The FTSEurofirst 300 index moved in and out of negative territory and was up 0.1 per cent at 1,524.49 points by 0839 GMT after falling at the open. The index fell for a sixth straight session on Tuesday, when it closed 0.4 per cent lower after hitting its lowest level since mid-February.
Rising bond yields, Greece debt deal
Analysts said that investors stayed cautious following a rise in bond yields, which tends to increase companies’ borrowing costs, and ongoing debt negotiations in Greece.
“There are two biggest concerns for the market at the moment - lingering Greek debt negotiations and rising bond yields,’’ Christian Stocker, strategist at UniCredit in Munich, said.
“But equity investors have overreacted in the past sessions and the market has become ‘oversold’. I expect a recovery in the coming days on technical grounds. In the longer term, equities will stay attractive as companies’ earnings outlook is improving and the European economy is gradually recovering.’’
The relative strength index (RSI) for the FTSEurofirst 300 index was hovering close to 30 — a technically “oversold’’ condition that often results in a bounce back.
The STOXX Europe 600 Technology index fell 0.8 per cent, the biggest sectoral decliner, dragged down by a 1.5 per cent fall in Capgemini after it raised €505.8 million ($570.7 million).
AMS slumped 23 per cent following a report in Swiss newspaper Finanz und Wirtschaft that the sensor manufacturer had lost a key contract with Apple.
Among other movers, Weir Group shares dropped 2.7 per cent after the Scottish industrial engineering company said the second quarter was proving to be very challenging for its oil & gas division.
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